Londiwe Buthelezi: Business Report
Medical schemes struggled to align their price increases with inflation because health-care costs tended to rise faster than the consumer price index (CPI), Discovery Health said yesterday. This was also the reason some schemes had failed to implement the price recommendations of the Council for Medical Schemes (CMS).
The country’s biggest medical scheme said when the three-year average annualised inflation rate was 5.5 percent, medical inflation was 10.9 percent. Discovery said that the issue was not a South African one, as medical inflation in the US also stood at 7.5 percent at a time when CPI rose 1.5 percent.
The CMS recommended last year that contribution increase assumptions for 2012 should be between 4.3 percent and 5.3 percent because last November’s CPI growth was 6.1 percent.
Jonathan Broomberg, the chief executive of Discovery Health, said the problem with implementing such recommendations was that members wanted to be covered in full, which was impossible if contributions increased at CPI or less.
The scheme said drivers of medical inflation included the high costs of new biologic medicines and an increased disease burden.
“We do see a trend of increasing costs in areas such as cancer treatment, new biologic medicines for chronic disease and hospitalisation for high cost events,” Broomberg said.
He said biologic drugs in chronic medicines used for rheumatoid arthritis such as Revellex, Enbrel and Humira cost about R7 000 to R10 000 a patient a month and these were used for the rest of one’s life.
New medical technologies that allowed for earlier diagnosis and more aggressive treatment also drove up costs.
Another crucial factor was high utilisation rates due to benefit abuse. Discovery said in one instance, a single member, aged 32, visited a biokineticist three times a week during 2010 for personal training.
Broomberg said a single member seeing a physiotherapist twice weekly as a preventative intervention for tension headaches cost R46 000 a year.
“In order to ensure that the medical schemes can continue to provide full cover for critical health events, it is our responsibility to manage abuse wherever we identify it, and to ensure that the benefits of the scheme are used appropriately and responsibly,” he said.
Discovery said its rich benefit pool automatically covered 98 percent of members, giving them access to unlimited cover for prescribed minimum benefits. It also spent over R1.55 billion on the chronic drug benefit, which allows members to use medicines not listed on the medicine list.
